Bitcoin’s fall from grace, tightening attention on ICOs, and a planned examination of crypto funds are just some of the mushrooming challenges in the cryptocurrency space. Given the increasing concerns, support for a bitcoin ETF has lost steam — but it hasn’t completely evaporated.
In a newly released letter to the US Securities and Exchange Commission (SEC), the president of Cboe Global Markets — which was behind one of the two bitcoin futures trading platforms launched in December — responded to the regulator’s misgivings over possible illiquidity and fragmentation in bitcoin markets, reported Business Insider.
“Until the questions identified above can be addressed satisfactorily, we do not believe that it is appropriate for fund sponsors to initiate registration of funds that intend to invest substantially in cryptocurrency and related products,” the SEC said in January.
Speaking to the liquidity of both bitcoin and the bitcoin futures markets, Cboe Global Markets President Chris Concannon said spot bitcoin exchanges have seen turnover that’s on par with some traditional markets.
“[W]hile the current bitcoin futures trading volumes on Cboe Futures Exchange and CME may not currently be sufficient to support ETPs seeking 100% long or short exposure to bitcoin, Cboe expects these volumes to continue to grow and in the near future reach levels comparable to those of other commodity futures products at the time that they were included in [exchange-traded products],” Concannon said.
He added that the issue of market fragmentation isn’t unique to cryptocurrencies, pointing out that other assets that have their own ETFs face the same concern.
“If you look at the currency or the gold market, it is probably more fragmented than crypto,” he told Business Insider. “There are a lot of venues to access currency markets.”
Bringing a bitcoin fund for retail investors to market has so far proven impossible for hopeful fund providers, whose efforts have been blocked by the SEC. If one were to get launched, according to JPMorgan, its impact would be similar to that of the first gold-linked ETF, SPDR Gold Shares ETF, in 2014.
“[R]etail access to gold has skyrocketed as new investors more easily turn to the gold market as a portfolio diversifier and as a foundational asset,” the firm said.
According to Concannon, Cboe’s letter to the SEC isn’t meant to rush any decision. Instead, it aims to “point out areas that can be satisfied” and advocate for the “development of the marketplace.”
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